ASHTF - Ashtead Group plc (ASHTF) Q3 2025 Earnings Call Transcript

2025-03-04 13:12:02 ET

Ashtead Group plc (ASHTF)

Q3 2025 Results Conference Call

March 04, 2025 07:00 AM ET

Company Participants

Brendan Horgan - Chief Executive Officer

Alex Pease - Chief financial officer

Conference Call Participants

Lush Mahendrarajah - JP Morgan

Rob Wertheimer - Melius Research

Suhasini Varanasi - Goldman Sachs

Katie Fleischer - KeyBanc Capital Markets

Annelies Vermeulen - Morgan Stanley

Rory Mckenzie - UBS

Neil Tyler - Redburn Atlantic

Allen Wells - Jefferies

Karl Green - RBC

Carl Raynsford - Bernberg

James Rose - Barclays

Thomas Burlton - BNP Paribas

Presentation

Brendan Horgan

Thank you, operator, and good morning, everyone, and welcome to Ashtead Group Q3 results presentation. I'm speaking from our U.S. support office and joined by Alex Pease, and Will Shaw. As you know, Alex joined in October and formally took over from Michael, CFO at the end of February.

Since joining, Alex has been highly engaged, getting to know our people and our business and working closely with Michael and the broader finance team to ensure a seamless transition. I speak on behalf of many of our colleagues when expressing the gratitude we have for the countless contributions Michael has made to the success of our business.

To consider just for a moment, the then and the now difference in this business, be it our sheer scale, profitability, financial strength or track record of success during his 21 years, the body of work over a career that anyone should be proud of. And personally, what a pleasure has been to partner with Michael over the years.

So for this, it's more of a see you later than goodbye as we'll continue to have access to Michael's wise counsel until September when he formally retires from the group. Before turning to the slides, and as we always do, I will begin this morning by addressing our Sunbelt team members listening in, specifically recognizing their leadership in the health and safety of our people, our customers and the members of the communities we serve.

In December, we closed our calendar year with a total recordable incident rate of 0.65 and a lost time rate of 0.11. Both of these metrics represent record performance in frequency and severity, the precise intent of Engage for Life. Additionally, we successfully launched our driver safety profile in January in our organization operating Sunbelt Rentals vehicle.

The driver safety profile is a proprietary system which deploys a risk-based approach to reducing our exposures on the road. And although early in development, we are already seeing positive trends. The key to this really is it's another example of not allowing complacency into our culture. So thank you. Thank you for your efforts to date and your ongoing commitment to Engage for life. Given it's Q3, we'll keep today's update relatively brief, starting with the highlights on Slide 3. The business delivered strong performance in the period with group and U.S. rental revenues up 5% and 4%, respectively, trading in line with our December guidance. Total revenues were flat year-on-year, largely reflecting lower used equipment sales as we expected. These rental revenues and strong fall-through delivered group EBITDA growth of 3% to $3.9 billion, PBT of $1.7 billion and EPS of $2.91. These are record revenues and EBITDA for the first 9 months with EBITDA margins of 47% at the group level and 49% in the U.S. And before the impact of lower gains on asset sales, these are record PBT levels as well. From a capital allocation standpoint, in accordance with our Sunbelt 4.0 priorities, we invested $2.1 billion in CapEx, which fueled existing location fleet needs and greenfield openings.

We expanded our North American footprint by 54 locations through 43 greenfield openings and a further 11 through 2 bolt-on acquisitions. Despite these levels of investment, we delivered free cash flow of $858 million in the 9 months. We commenced a new share back program, of course, in December of up to $1.5 billion over 18 months and finished the period at 1.7x net debt to EBITDA, comfortably within our long-term range of 1 to 2x.

Our team is laser focused on Sunbelt 4.0, advancing each of the 5 actionable components, which you know as customer growth, performance, sustainability and investment. I'll highlight a few successes beginning with the growth among our largest U.S. customers, specifically our top 200 where our strategic account team and the organization at large are advancing our relationships and positioning to deliver greater than 20% rental revenue growth year-on-year with these customers....

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